Translated material
Ruble splitting
Regional budgets will be forced to share with municipal ones
It seems that the country is facing another inter-budgetary redistribution of financial resources . However, if in previous years it was mainly about transferring tax revenues from the regional to the federal level in order to equalize the budgetary capacity of the federal subjects, now the emphasis will be on supporting municipalities. By the way, it will again be lost to the regional budgets.President Vladimir Putin, apparently, has heard the pleas of municipalities, which constantly complain about lack of money. And yesterday, at an all-Russian meeting of municipal councils, he said that he would instruct the government to oblige the regions to share tax revenues with the municipalities. According to the head of state, it is “unfair to blame municipalities” for the new spending powers that they received during the local government reform, which were not supported by funding, in particular the maintenance of the excessively expensive housing and communal services due to the almost complete dilapidation.
Let us recall that according to the law “On the general principles of organizing self-government in the Russian Federation”, which came into force on January 1, 2006, the municipality is responsible, among other things, for the organization of electricity, heat, gas and water supply to the population, fuel supply to the population, and for the maintenance and the construction of public roads, bridges and other transport engineering structures within the boundaries of settlements, for the provision of housing for the poor and those in need of improved living conditions, for the maintenance of municipal housing stock, etc. It is clear that the municipalities do not have money for all this. Most spending powers are carried out through subsidies from regional budgets. As the head of the State Duma, Boris Gryzlov, said on Monday, “95% of municipalities are subsidized, that is, they do not have the opportunity to form a full-fledged budget; municipalities are actually subsidized by regional authorities.” According to him, “those powers that have been transferred to the level of municipalities as part of the local government reform are not fully accompanied by financial resources.”
The President recalled yesterday that subsidies to equalize the level of budgetary security last year amounted to 255 billion rubles, another 437 billion rubles. was allocated for the execution of delegated powers. “In total, the local government budget in 2006 amounted to 16% of the consolidated budget of the country and 41% of the consolidated budget of the regions, and already in the first half of 2007 the increase in transfers exceeded 60%,” noted the head of state.
Municipalities are not happy with such dependence on regional budgets (according to the Ministry of Finance, in 2006, municipalities were able to finance only 59% of expenses from their own revenues, and according to the Accounts Chamber, no more than 40%). The federal authorities, too, judging by Mr. Putin’s speech yesterday. “People are concerned about the lack of infrastructure and poor social infrastructure of a significant number of settlements, the low quality of public services, municipal health care and education. In this regard, the issue of providing municipalities with a sufficient financial and material base remains fundamental,” the head of state emphasized. In order not only to support municipalities financially, but also to interest them in making money themselves, Vladimir Putin proposed transferring part of the income tax to local authorities. Now this tax of 24% is split into two parts - 5% goes to the federal budget, 19% to the regional budget.
“Municipalities get nothing. But the legislation allows regions to redistribute resources in favor of municipalities,” the president pointed the heads of the federal subjects on the true path, adding that such decisions have already been made in 20 regions.
Meanwhile, financial innovations await not only municipal employees, but also regional officials. The Ministry of Finance has prepared a draft government resolution on the approval of standards for the formation of expenses for the maintenance of government bodies in subsidized subjects of the federation, of which the vast majority. These include regions in whose budgets the share of interbudgetary transfers (except for subventions) from the federal budget during two of the last three reporting financial years exceeded 20% of the consolidated budget’s own revenues. The Ministry of Finance proposes to finance the authorities of such regions in the amount of a strictly fixed share of the total amount of its income and subsidies.
In the document, the federal subjects are divided into four groups according to population size: less than 0.5 million people, 0.5-1 million people, 1-2 million people and more than 2 million people. The maximum standard proposed for the Chechen Republic is 16.14%, the minimum for the Aginsky Buryat Autonomous Okrug is 2.69%. The resolution is expected to come into effect from the beginning of next year.
Yesterday, Minister of Regional Development Dmitry Kozak, who also participated in the all-Russian meeting of municipal councils, spoke in favor of the most transparent procedure for sending budget funds to the regions.
“I want to do everything to minimize “discretion,” including my own, that is, to eliminate the subjective factor, so that regions and municipalities know in advance what they can claim from the federal budget,” said the head of the Ministry of Regional Development. “No one should give anything to anyone under the counter,” the minister added.
It seems that it is the heads of the Ministry of Finance and the Ministry of Regional Development - Alexei Kudrin and Dmitry Kozak - who will become the main responsible for budgetary relations. The Ministry of Finance has always had such powers, and the Ministry of Regional Development, after transferring federal target programs to its jurisdiction, is automatically forced to get involved in the problems of regional budgeting.